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HomeMy WebLinkAbout03-1022 EquityWILLIAM C. KOLLAS : WILLIAM COSTOPOULOS: JAMES C. COSTOPOULOS: GEORGE J. MALLIOS AND TESSIE MALLIOS : NEWVILLE WATER AND SEWER AUTHORITY: IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 2003-1022 EQUITY CIVIL ACTION - EQUITY IN RE: DEFENDANT'S PRELIMINARY OBJECTIONS BEFORE BAYLEY, GUIDO, JJ. OPINION AND ORDER Currently before us are several preliminary objections which have been filed by the defendant. Before we address the objections, we will review the facts as set forth in the complaint. FACTUAL BACKGROUND Plaintiffs William Costopoulos, James Costopoulos and William Kollas (hereinafter "Owners") own the North Newton Hills Subdivision located in Newville, Cumberland County, Pennsylvania. ~ Defendant Newville Water and Sewer authority is a governmental authority of the Borough of Newville.2 The development rights to Phases II and III of the subdivision had been listed for sale with a local real estate firm. On November 22, 2002, the Defendant advised the Owners' realtor that it had "agreed to provide reserve capacity to George Mallios and ~ See Complaint, paragraph 4. Although the complaint lists the location as Newville, the exhibits refer to the location as North Newton Township. : See Complaint, paragraph 3. NO. 2003-1022 EQUITY Dean Bear for the development of 44 new homes in the North Newton Hills Subdivision, Phases I! and III" (emphasis added).3 Shortly thereafter, Defendant's attorney sent a draft "Sewer Agreement" to the Owners' realtor. It listed George Mallios and Dean Bear "jointly" as the "Applicant".4 The agreement provided, inter alia, that "Applicant will develop a housing development known as North Newton Hills, Subdivision Phases I! and III" on lands "presently owned by William C. Kollas, William C. Costopoulos and James Costopoulos.''5 It went on to provide that defendant would reserve sewage capacity for "44 EDU's" in return for "a reservation charge of $28,732 or $653 per EDU.''6 The agreement also set an annual reservation rental charge of $4,672.80 for the 44 EDU's.7 Finally, the agreement provided that it could not be assigned "by either party without the prior written consent of the other...,,.8 On December 19, 2002, Defendant's attorney sent a letter to the Owners' realtor to advise him that Defendant had increased its fees. It went on to state: If the Sewer Agreement is not executed and the reservation charge of $28,732.00 is not received by the Authority by its next meeting on January 22, 2003, the Sewer Agreement that was provided to you on November 25, is void and Phases I! and II! will be subject to the fees adopted December 18, 2002. Should you have any questions concerning this matter, please contact the Borough Manager, Mr. Fred Potzer, at (717) 776-7633.9 Exhibit D to the Complaint. Exhibit C to the Complaint. Exhibit C to the Complaint. Exhibit C to the Complaint. Exhibit C to the Complaint. Exhibit C to the Complaint. Exhibit E to the Complaint. Fred Potzer was also Defendant's Manager. NO. 2003-1022 EQUITY Pursuant to a telephone conference with Fred Potzer on January 21, 2003, Plaintiffs Kollas and George Mallios received an extension to January 28, 2003 to meet the aforementioned requirements, l0 On that same date, Plaintiff Kollas faxed a letter to Fred Potzer which stated in relevant part: Please be advised that William C. Kollas, William C. Costopoulos and James C. Costopoulos, owners of the remaining ground in North Newton Subdivision Phases I! and II! will exercise the reservation of the sewer capacity for North Newton Hills and will remit to you the sum of $28,732.00 on or before January 28, 2003. In the interim, we will have a sewer agreement executed by these gentlemen or their assigns and sent to you as well. ~ On January 23, 2003, Defendant advised Plaintiff Kollas that "the Board denied your request for reservation of sewer capacity.''~2 (emphasis added). He was also told that the Sewer Agreement was void since it had not been signed and forwarded along with the reservation fee. ~3 The letter concluded by stating that "any new agreement would be subject to the new rate of $3166.00 per EDU.''~4 On January 27, 2003, the Owners agreed to sell Phases I! and II! to the remaining plaintiffs herein, George Mallios and Tessie Mallios. The sales agreement provided, inter alia, that the Mallios' would reimburse Sellers for the cost of the sewer reservation fee at the time of settlement.~5 It also provided that if the cost exceeded $28,732, the agreement would be void. ~6 Complaint paragraph 14. Exhibit F to the Complaint. Exhibit G to the Complaint. Exhibit G to the Complaint. Exhibit G to the Complaint. Exhibit B to the Complaint. Exhibit B to the Complaint. NO. 2003-1022 EQUITY On January 28, 2003, Plaintiff Kollas requested that Defendant honor "our exercise of the reservation of the sewer capacity". ~? The Defendant responded that it would not honor the request, explaining: The request for sewer capacity was presented by Mr. Norm Dellinger and the proposed draft Sewer Agreement was drafted between the Authority and Mr. George Mallios and Mr. Dean Bear. Therefore, William (2. (2ostopoulous, James (2. (2ostopolous and yourself are simply not parties to the agreement, nor did you.., ever make the request to reserve sewer capacity for North Newton Hills. (emphasis added). 18 Thereafter Plaintiffs instituted the instant action in promissory estoppel. They allege that they relied upon the extension granted by Mr. Potzer. Therefore, they contend that "the promise of the Defendant Authority should be enforced,"~9 and that this Court "direct Defendant Authority to accept the aforesaid sewer agreement pursuant to its original terms in all respects...,,.20 2) DISCUSSION Defendant has filed five separate preliminary objections. They are 1) demurrer; failure to join a necessary party; 3) lack of standing of all plaintiffs except George Mallios, 4) insufficient specificity; and 5) failure of the pleading to conform to law. We will grant the second preliminary objection because we are satisfied that Dean Bear is an indispensable party to this action. We will dismiss preliminary objections 1 and 4 without discussion because, in our view, they are clearly without merit. For the reasons ~7 Exhibit H to the Complaint. ~8 Exhibit I to the Complaint. 19 Complaint, paragraph 23. 20 Complaint, "Wherefore" clause. NO. 2003-1022 EQUITY hereinafter set forth, we will dismiss the majority of the remaining preliminary objections.21 Indispensable Party. Defendant contends that Dean Bear is an indispensable party to this action.22 To the extent that the complaint seeks to enforce the Sewer Agreement, we agree. The general rule is that "a party in an equity action is indispensable when he has such an interest that a final decree cannot be made without affecting it, or leaving the controversy in such a condition that a final determination may be wholly inconsistent with equity and good conscience." Mechanicsburg Area School Dist. lA. Kline, 494 Pa. 476, 481, 431 A.2d 953,956 (1981) (citations omitted). In other words, "his presence as a party is indispensable where his rights are so connected with the claims of the litigants that no decree can be made between them without impairing such rights." Id. The determination of this issue involves considering the following questions: 1. Do absent parties have a right or interest related to the claim? 2. If so, what is the nature of that right or interest? 3. Is that right or interest essential to the merits of the issue? 4. Can justice be afforded without violating the due process rights of absent parties? In the instant case, Dean Bear is a joint applicant and party to the proposed Sewer :~ We address the remaining preliminary objections so that they need not be relitigated in the event Dean Bear is joined as a party plaintiff. 22 This preliminary objection is based upon Pa. Rule of Civil Procedure 2227(a) which provides: "Persons having only a joint interest in the subject matter of an action must be joined on the same side as plaintiffs or defendants." NO. 2003-1022 EQUITY Agreement. His rights and obligations under, and interest in, that agreement cannot be separated from those of George Mallios. The Defendant would be entitled to look to both Dean Bear and George Mallios for the performance of the applicants' numerous obligations thereunder. Since any order directing that the agreement be enforced would significantly impact Dean Bear, he is clearly an indispensable party to this action. The failure to join an indispensable party deprives us of subject matter jurisdiction. Huston v. Campanini, 464 Pa. 147, 346 A.2d 258 (1975). Therefore, Defendant's request that this action be dismissed for failure to join an indispensable party must be granted unless Dean Bear is joined as a party Plaintiff. Standing of the Plaintiffs. Defendant next contends that none of the plaintiffs, except George Mallios, have standing to bring the instant action. We disagree. The doctrine of standing "is a prudential, judicially-created tool meant to winnow out those matters in which the litigants have no direct interest in pursuing the matters." In re: Hickson, 821 A.2d 1238, 1243 (Pa. 2003). The requirement of standing is "critical" to ensure that there is a "legitimate controversy before the Court." Id (citations omitted). The Hickson Court went on to state: In practical terms, we are assured that there is a legitimate controversy if the proponent of a legal action has somehow been "aggrieved" by the matter he seeks to challenge. A litigant can establish that he has been "aggrieved" if he can show that he has a substantial, direct and immediate interest in the outcome of the litigation in order to be deemed to have standing. "A 'substantial' interest is an interest in the outcome of the litigation which surpasses the common interest of all citizens in procuring obedience to the law. A 'direct' interest requires a showing that the matter complained of caused harm to the party's interest. An 'immediate' interest involves the nature of the causal NO. 2003-1022 EQUITY connection between the action complained of and the injury to the party challenging it." Yet, if that person "is not adversely affected in any way by the matter he seeks to challenge [, he] is not 'aggrieved' thereby and has no standing to obtain a judicial resolution of his challenge. In particular, it is not sufficient for the person claiming to be ' aggrieved' to assert the common interest of all citizens in procuring obedience to the law." 821 A.2d at 1243 (citations omitted). Applying the criteria set forth in Hickson, we are satisfied that all plaintiffs have standing. The owners are referenced in the Sewer Agreement and will clearly benefit by its implementation. Further, they, along with Tessie Mallios, are parties to an Agreement of Sale which is contingent upon the enforcement of the reservation fee contained in the Sewer Agreement. Under these circumstances, all of the plaintiffs are aggrieved by the Defendant's failure to abide by the terms of the proposed agreement. Consequently, the preliminary objections challenging standing are without merit. Failure of the Complaint to Conform to Law. In its last preliminary objection Defendant alleges several instances in which the complaint fails to conform to law. We are satisfied that they are all without merit except one. The caption lists the complaint as "Civil Action - Law/Equity". Defendant correctly points out that a cause of action for promissory estoppel is addressed to the equity side of the Court. Crouse v. Cyclops Industries, 560 Pa. 394, 403,745 A.2d 606, 610 (2002). In the event Plaintiffs file an amended complaint, this particular preliminary objection should be remedied. NO. 2003-1022 EQUITY ORDER OF COURT AND NOW, this 31s~: day of DECEMBER, 2003, for the reasons set forth in the accompanying opinion, it is hereby ordered and directed as follows: 1 .) Defendant's Preliminary Objections in the nature of a demurrer, those questioning the standing of the plaintiffs and those challenging the specificity of the complaint are DENIED. 2.) The Preliminary Objection alleging that the complaint fails to conform to law is GRANTED in part and DENIED in part. It is granted insofar as the caption shall delete any reference to "Law" since this is an equity cause of action. In all other respects it is DENIED. 3.) The Preliminary Objection alleging the nonjoinder of a necessary party is GRANTED. This action shall be dismissed unless Dean Bear is joined as a party within twenty (20) days. By the Court, /s/Edward E. Guido Edward E. Guido, J. William C. Costopoulos, Esquire G. Bryan Salzmann, Esquire :sld